The words, in plain English.

A tiny piece of ownership in a company. If the company grows, the piece can be worth more; if it struggles, less.

Example: Owning one share of a sneaker company means you own a very small slice of it.

A loan you make to a company or government. They promise to pay you interest and give the money back later.

Example: You lend a city $100, and it pays you a little interest every year until it repays the $100.

A basket that holds many investments at once, so one purchase spreads your money across all of them.

Example: Like buying a bag of mixed candy instead of one piece.

A fund that simply copies a list of companies (an index) instead of having someone pick winners.

Example: A fund that holds all the companies in the S&P 500 in the same proportions.

Exchange-traded fund: a fund you can buy and sell during the day like a stock. Many ETFs are index funds.

Example: Buying one share of an S&P 500 ETF gets you a slice of about 500 companies.

A list of about 500 of the largest U.S. companies, often used as a scoreboard for the U.S. stock market.

Example: When people say “the market was up 1% today”, they often mean the S&P 500.

Cash some companies pay to their owners out of profits, usually every few months.

Example: A company pays $0.50 a share each quarter; with 10 shares you get $5.

Earning a return on your past returns, not just on what you put in. It grows faster the longer it runs.

Example: $1,000 earning 8% becomes $1,080; the next year, 8% is earned on $1,080.

Spreading money across many investments so one bad one hurts less.

Example: Not putting all your eggs in one basket.

The chance that an investment loses money or does worse than you hoped. Higher possible returns usually come with more risk.

Example: A savings account is low risk; a single small company’s stock is high risk.

How much and how fast a price bounces up and down.

Example: A stock that moves 5% most days is more volatile than one that moves 0.5%.

The yearly fee a fund charges, shown as a percent of what you have in it.

Example: A 0.10% expense ratio costs $1 a year for every $1,000 invested.

Putting in the same amount on a regular schedule, whatever the price is that day.

Example: Investing $200 on the 1st of every month, in good months and bad ones.

A retirement account offered through an employer. Money usually goes in from your paycheck before income tax, and is taxed when you take it out later.

Example: Setting 5% of each paycheck to go into your work’s 401(k).

A version of the 401(k) where you pay tax on the money now, and qualified withdrawals in retirement can be tax-free.

Example: Paying the tax today so the growth isn’t taxed later, if the rules are met.

A retirement account similar to a 401(k), offered by schools, hospitals and many nonprofits.

Example: A teacher saving for retirement through the school district’s plan.

Individual retirement account: one you open yourself, not through work. Contributions may lower your taxes now, and you pay tax when you withdraw.

Example: Opening an IRA on your own and adding a little each month.

An IRA where you put in money you’ve already paid tax on; qualified withdrawals later can be tax-free. Income limits apply.

Example: Taxed now, so growth can come out tax-free in retirement if the rules are met.

A retirement account for self-employed people and small business owners, with higher contribution limits than a regular IRA.

Example: A freelance photographer saving part of each year’s profit.

Money your employer adds to your retirement account when you contribute, up to a limit.

Example: If your job matches 50% of the first 6% you save, putting in $100 can add $50 more.

The schedule for when your employer’s contributions fully become yours. Your own contributions are always yours.

Example: If the match vests over 3 years and you leave after 1, you may keep only part of it.

A bank account for money you’re not spending yet. It’s easy to reach and usually pays a small amount of interest.

Example: Keeping next month’s rent somewhere safe.

A savings account that pays a higher interest rate than a typical one. Rates can change at any time.

Example: The same savings account idea, with a bigger interest rate.

Certificate of deposit: you agree to leave money at a bank for a set time in exchange for a fixed interest rate. Taking it out early usually costs a penalty.

Example: Locking $1,000 away for one year at a set rate.

An account or fund that holds very short-term, lower-risk investments and pays interest that moves with rates.

Example: A place to park cash that may pay more than a basic savings account.

Cash set aside for surprises, like a car repair or a job loss, so you don’t have to borrow or sell investments.

Example: A few months of basic bills kept in savings.

Prices rising over time, so the same dollar buys less.

Example: If a $3.00 snack costs $3.09 next year, that’s 3% inflation.

An account for education savings. Growth can be tax-free when the money is used for qualified education costs.

Example: A family saving a bit each month for a child’s future college costs.

Life insurance that covers a set number of years. If the insured person dies in that time, it pays out; if not, the coverage simply ends.

Example: Coverage for 20 years while children are growing up.

Life insurance meant to last your whole life, with a part that builds a cash value. It usually costs much more than term for the same payout.

Example: A policy that stays in place for life as long as payments are made.

Permanent life insurance whose cash value is invested in market-based options, so it can grow or shrink. Fees and rules can be complex.

Example: Part of each payment goes into investments inside the policy.

The savings part of a permanent life insurance policy that can build over time. Borrowing it or taking it out can reduce the payout.

Example: A policy showing a cash value you could borrow against.

Tax-deferred means you pay tax later, when you take the money out. Tax-free means qualified withdrawals aren’t taxed at all.

Example: A traditional 401(k) is tax-deferred; a Roth IRA can be tax-free in retirement.

The profit when you sell something for more than you paid. It can be taxed, often at a lower rate if held over a year.

Example: Buying a share for $50 and selling it for $70 is a $20 capital gain.